SECOND DIVISION

[G.R. No. 119571. March 11, 1998]

MITSUI O.S.K. LINES LTD., represented by MAGSAYSAY AGENCIES,

INC., petitioner, vs. COURT OF APPEALS and LAVINE
LOUNGEWEAR MFG. CORP., respondents.
DECISION
MENDOZA, J.:

This is a petition for review on certiorari of the January 25, 1995 decision of the
Court of Appeals[1] and its resolution of March 22, 1995 denying petitioners motion for
reconsideration. The appellate court upheld orders of Branch 68 (Pasig) of the Regional
Trial Court, National Capital Judicial Region, denying petitioners motion to dismiss in the
original action filed against petitioner by private respondent.
The facts are not in dispute.[2]
Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation represented in the
Philippines by its agent, Magsaysay Agencies. It entered into a contract of carriage
through Meister Transport, Inc., an international freight forwarder, with private
respondent Lavine Loungewear Manufacturing Corporation to transport goods of the
latter from Manila to Le Havre, France. Petitioner undertook to deliver the goods to
France 28 days from initial loading. On July 24, 1991, petitioners vessel loaded private
respondents container van for carriage at the said port of origin.
However, in Kaoshiung, Taiwan the goods were not transshipped immediately, with
the result that the shipment arrived in Le Havre only on November 14, 1991. The
consignee allegedly paid only half the value of the said goods on the ground that they
did not arrive in France until the off season in that country. The remaining half was
allegedly charged to the account of private respondent which in turn demanded
payment from petitioner through its agent.
As petitioner denied private respondents claim, the latter filed a case in the
Regional Trial Court on April 14, 1992. In the original complaint, private respondent
impleaded as defendants Meister Transport, Inc. and Magsaysay Agencies, Inc., the
latter as agent of petitioner Mitsui O.S.K. Lines Ltd. On May 20, 1993, it amended its
complaint by impleading petitioner as defendant in lieu of its agent. The parties to the
case thus became private respondent as plaintiff, on one side, and Meister Transport
Inc. and petitioner Mitsui O.S.K. Lines Ltd. as represented by Magsaysay Agencies,
Inc., as defendants on the other.

Petitioner filed a motion to dismiss alleging that the claim against it had prescribed
under the Carriage of Goods by Sea Act.
The Regional Trial Court, as aforesaid, denied petitioners motion as well as its
subsequent motion for reconsideration. On petition forcertiorari, the Court of Appeals
sustained the trial courts orders. Hence this petition containing one assignment of error:

THE RESPONDENT COURT OF APPEALS COMMITTED A SERIOUS

ERROR OF LAW IN RULING THAT PRIVATE RESPONDENTS AMENDED
COMPLAINT IS (sic) NOT PRESCRIBED PURSUANT TO SECTION 3(6) OF
THE CARRIAGE OF GOODS BY SEA ACT.
The issue raised by the instant petition is whether private respondents action is for
loss or damage to goods shipped, within the meaning of 3(6) of the Carriage of Goods
by Sea Act (COGSA).
Section 3 provides:

(6) Unless notice of loss or damage and the general nature of such loss or
damage be given in writing to the carrier or his agent at the port of discharge
or at the time of the removal of the goods into the custody of the person
entitled to delivery thereof under the contract of carriage, such removal shall
be prima facie evidence of the delivery by the carrier of the goods as
described in the bill of lading. If the loss or damage is not apparent, the notice
must be given within three days of the delivery.
Said notice of loss or damage may be endorsed upon the receipt for the
goods given by the person taking delivery thereof.
The notice in writing need not be given if the state of the goods has at the time
of their receipt been the subject of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in
respect of loss or damage unless suit is brought within one year after delivery
of the goods or the date when the goods should have been
delivered: Provided, that, if a notice of loss or damage, either apparent or
concealed, is not given as provided for in this section, that fact shall not affect
or prejudice the right of the shipper to bring suit within one year after the
delivery of the goods or the date when the goods should have been delivered.
In the case of any actual or apprehended loss or damage, the carrier and the
receiver shall give all reasonable facilities to each other for inspecting and
tallying the goods.

In Ang v. American Steamship Agencies, Inc., the question was whether an action
for the value of goods which had been delivered to a party other than the consignee is
for loss or damage within the meaning of 3(6) of the COGSA. It was held that there was
no loss because the goods had simply been misdelivered. Loss refers to the
deterioration or disappearance of goods.[3]

As defined in the Civil Code and as applied to Section 3(6), paragraph 4 of the
Carriage of Goods by Sea Act, loss contemplates merely a situation where no
delivery at all was made by the shipper of the goods because the same had
perished, gone out of commerce, or disappeared in such a way that their
existence is unknown or they cannot be recovered.[4]
Conformably with this concept of what constitutes loss or damage, this Court held in
another case[5] that the deterioration of goods due to delay in their transportation
constitutes loss or damage within the meaning of 3(6), so that as suit was not brought
within one year the action was barred:

Whatever damage or injury is suffered by the goods while in transit would

result in loss or damage to either the shipper or the consignee. As long as it is
claimed, therefore, as it is done here, that the losses or damages suffered by
the shipper or consignee were due to the arrival of the goods in damaged or
deteriorated condition, the action is still basically one for damage to the
goods, and must be filed within the period of one year from delivery or receipt,
under the above-quoted provision of the Carriage of Goods by Sea Act.[6]
But the Court allowed that

There would be some merit in appellants insistence that the damages suffered
by him as a result of the delay in the shipment of his cargo are not covered by
the prescriptive provision of the Carriage of Goods by Sea Act above referred
to, if such damages were due, not to the deterioration and decay of the goods
while in transit, but to other causes independent of the condition of the cargo
upon arrival, like a drop in their market value. . . .[7]
The rationale behind limiting the said definitions to such parameters is not hard to
find or fathom. As this Court held in Ang:

Said one-year period of limitation is designed to meet the exigencies of

maritime hazards. In a case where the goods shipped were neither lost nor
damaged in transit but were, on the contrary, delivered in port to someone
who claimed to be entitled thereto, the situation is different, and the special
need for the short period of limitation in cases of loss or damage caused by
maritime perils does not obtain.[8]

In the case at bar, there is neither deterioration nor disappearance nor destruction
of goods caused by the carriers breach of contract. Whatever reduction there may have
been in the value of the goods is not due to their deterioration or disappearance
because they had been damaged in transit.
Petitioner contends:

Although we agree that there are places in the section (Article III) in which the
phrase need have no broader meaning than loss or physical damage to the
goods, we disagree with the conclusion that it must so be limited wherever it is
used. We take it that the phrase has a uniform meaning, not merely in Section
3, but throughout the Act; and there are a number of places in which the
restricted interpretation suggested would be inappropriate. For example
Section 4(2) [Article IV(2) (sic) exempts exempts (sic) the carrier, the
ship (sic), from liability loss or damage (sic) resulting from certain courses
beyond their control.[9]
Indeed, what is in issue in this petition is not the liability of petitioner for its handling of
goods as provided by 3(6) of the COGSA, but its liability under its contract of carriage
with private respondent as covered by laws of more general application.
Precisely, the question before the trial court is not the particular sense of damages
as it refers to the physical loss or damage of a shippers goods as specifically covered
by 3(6) of COGSA but petitioners potential liability for the damages it has caused in the
general sense and, as such, the matter is governed by the Civil Code, the Code of
Commerce and COGSA, for the breach of its contract of carriage with private
respondent.
We conclude by holding that as the suit below is not for loss or damage to goods
contemplated in 3(6), the question of prescription of action is governed not by the
COGSA but by Art. 1144 of the Civil Code which provides for a prescriptive period of ten
years.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
Regalado (Chairman), Melo, Puno and Martinez, JJ., concur.

[1]

Per Justice Emeterio C. Cui and concurred in by Justices Consuelo Yares-Santiago and Conchita
Carpio-Morales.
[2]

Rollo, pp. 20-24, 106 and 117

[3]

19 SCRA 123 (1967). Accord Ang v. American Steamship Agencies, Inc., 19 SCRA 631 (1967).

[4]

Id. at 127.

[5]

Tan Liao v. American President Lines, Ltd., 98 Phil. 203 (1956).

[6]

Id. at 208.

[7]

Id. at 210.

[8]

Supra note 3 at 129.

[9]

Rollo, p. 37, citing Ganada & Kindred, Marine Cargo Delays 21-22 (1990) (emphasis added).